September 4, 2008

A Crude Awakening

If you haven't noticed the price of gas going up in recent months, check your pulse, you might be dead! With the exception of a recent drop in oil prices, Americans are paying a lot more than they used to for energy. But, why is the price of oil rising like Dick Cheney's cholesterol? Let's explore a few facts.

Fact #1: There is only a finite amount of oil on Earth
Fact #2: The demand for oil will only increase over time

Facts 1 & 2 combined tells us that gasoline (a product derived from oil) can only increase. Over the last several years, gas prices have increased at an average rate of about 30 cents a year. The first six months of 2008, gas prices spiked to over $4/gal. This was due to speculation by energy traders of a "cooling" US economy and a potential recession. Take a look at this graph.

Today, gas prices have come down from that all time high to more "normal" levels and will likely continue to drop over the next few months. However, this short-term relief is just that: short-term. Facts 1 & 2 will never go away and so we need to do what we can NOW to prepare for rising oil prices in the future.

How do Americans consume energy? We can breakdown energy consumption by consumer classes as follows:
  • Industrial
  • Transportation
  • Residential
  • Commercial
According to the US Department of Energy, most of the energy consumed in the United States is by industry (manufacturing, mining, construction, etc). If we can convert all equipment (i.e. construction vehicles, mechanized assembly lines, drills) to run off electricity and provide this electrical energy by means of clean, renewable energy sources (such as solar, wind and water power) or nuclear power, we can eliminate more than half of all greenhouse gas emissions in the United States. In addition, we will be more than halfway there on the road to energy independence. The result: lower energy prices for you and me, which leaves more money for our PS3s and plasma TVs.

Unfortunately, today, we are far from achieving that goal. 86% of all energy used in the United States is through the burning of fossil fuels. Over the last eight years, under the Bush administration, U.S. energy policies have been stagnant. However, starting in 2009 under the Obama presidency, U.S. energy policies are expected to undergo a renaissance.

A recent WER poll revealed that roughly 75% of Americans think that the US is too dependent on foreign fossil fuels and foreign oil. Over 80% believe that it's the government's job to eliminate this dependency and bring clean, renewable & efficient methods of power production right here.

No comments: